LONDON: The Bank of England has agreed temporarily to finance government borrowing in response to Covid-19 if funds cannot immediately be raised from debt markets, reviving a measure last used to any large degree during the 2008 financial crisis.
But markets were far choppier last month – before the BoE said it would buy £200 billion of assets, mostly bonds – and Thursday’s announcement gives the BoE scope to finance the government directly. The government and BoE said any borrowing from the Ways and Means facility – effectively the government’s overdraft with the BoE – would be repaid by the end of the year.
The facility currently has borrowing of 400 million pounds, and usage previously peaked at £19.9 billion in 2008.
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